Brent to hover around $100-110 in short term: Argus Media

Azlin Ahmad, Argus Media, says that the problem in supply due to planned maintenance in the North Sea and pipeline explosion from Iraq to Turkey are the two factors that have pushed up prices of Brent. However, she says that both the factors are temporary in nature. In the short term she expects the Brent to hover in the range of mid USD-110-110.

Below is the edited transcript of her interview to CNBC-TV18. Q: Brent crude has reached USD 109-110 levels. From hereon how would you map the movement of Brent?
A: Two factors have pushed up prices. First, the problem in supply due to planned maintenance in the North Sea. Secondly, pipeline explosion from Iraq to Turkey. But these are supply factors which are temporary. If these problems are resolved then crude prices will fall. Uncertainty in the eurozone has also factored into the price. 
With expectations on the statement of the ECB to do anything to keep the euro together has also factored into the price. So, unless we see some major destruction it will be difficult for the Brent to go above USD 110 in the short-term.  Q: What is the probability of a shutdown in production and a further spike up in crude from the levels that you were just alluding to?
A: Right now, Syria unrest is more of a concern, but Syria is a small producer. The market is worried that if the violence or the unrest escalates in Syria and expands to other Middle East countries, then the Middle East producers or Iran will step in. If the unrest is contained within Syria then the markets will be supported. Whether Syria unrest will be contained or it will it spread to other Middle East countries is a worry. Q: What would your average be for Brent crude price in the coming three-six months that India could use to map its fiscal deficit?
A: In the next three months the Brent prices will hover between the mid USD 100 to high USD 100. It will be volatile in a very narrow range. There are expectations that demand will strengthen in the fourth quarter. Reduction in Iranian supplies due to US sanctions will be felt more in the market and that could keep the prices even stronger Q4. Brent will hover between mid USD100-110. Q: You don't see a breakout above that USD 120 a barrel level if we get further weakening data from either the US or from the eurozone?
A: Not in the short-term. This is assuming that we don't see any major supply disruptions from any of the Middle East countries or Africa, but looking at where the market is right now it looks as if most of the bullish factors have been factored in and there is still a lot of uncertainty about demand and that could pull prices a bit lower if we don’t see any recovery in the eurozone nations particularly.